1. Field of the Invention
This invention relates to credit/debit transactions and more particularly relates to asset backed purchase cards.
2. Description of the Related Art
A common way to purchase goods and services in the modern economy is the credit card. A credit card allows a credit provider to effectively lend the user money to cover the cost of a purchase. When a purchase is made, the credit card issuer pays the purchase price to the seller, often withholding a fee for the service. In addition, the credit card user agrees to pay the card issuer the price of the purchase. At regular intervals, the card user is issued a bill from the credit card issuer for payment of money to cover the cost of purchases and any associated fees. Charge cards operate under similar principles, but require the charge card user to pay the entire balance at a regular interval.
Credit card users often face difficulties in paying the bills associated with their credit cards. Interest charges can be high, as can other fees associated with the use of the card. One justification for these high costs is the risk taken on by the credit card issuer associated with the loan in relation to inflation. The relative value of the loan may decrease under inflationary pressures, therefore, the lender must make a substantial return to hedge that risk.
A similar purchase system is the debit card, which requires the card user to maintain an account funded with money. A debit card allows a debit provider to pay the seller the price of the transaction and debit the price against the funds in the card user's account. Debit cards shift the risk associated with devaluation of the currency funding the account to the debit card user, who must maintain a balance of money in order to use the debit card. Inflation reduces the purchasing power of the money in the account, and a debit card user may find that the value of the money tied up in the debit card account is dramatically lower than it was when deposited.
In the U.S., credit, debit, and charge cards use the U.S. dollar to pay for purchases, calculate finance charges, and determine the amount owed. Card users in other countries typically use their local currency to track the amounts in debit or credit accounts. Regardless of the local currency used, inflation poses a risk to the users of the cards, either as increased costs and fees or as a direct risk to a deposit account backing a debit card.